SECOND QUARTER/ FIRST HALF 2016 PRESENTATION 25 August 2016 · PRESENTATION 25 August 2016 1 ......

SECOND QUARTER/FIRST HALF 2016 PRESENTATION

25 August 2016

1

• Highlights

• Financials

• Operational review

• Market update and prospects

• Q&A

Agenda

2

Highlights

Highlights

-500

50100150200250300350

2007 201620152014201320122011201020092008

Chemical tankersTank terminalsLPG/Ethylene

1. Proportional consolidation method according to actual historical ownership share

• Net result 2Q16 of USD 16 mill (1Q16 of USD 24 mill) and EBITDA of USD 61 mill (1Q16 of USD 69 mill).

• Softer chemical tanker spot market, however, utilization remained high due to stable contract nominations

• First half 2016 EBITDA of USD 129 mill compared to first half 2015 EBITDA of USD 88 mill

• The two first vessels in Odfjell Gas’ newbuilding programme have been cancelled and all paid instalments have been returned

• Balance sheet continues to strengthen• Stable results from Odfjell Terminals• LoI signed for construction of four stainless

steel chemical tankers

Annualised EBITDA1, USD mill

Odfix, Quarterly average Index, 1990=100

3

50

75

100

125

150

175

200

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Odfix Index

Odfix Quarterly Average 2007-2015

Chemical tanker spot earnings index (midcycle = 100)Source: Clarkson Platou

Financials

USD millions 2Q 2016 1Q 2016Gross revenue 241 249

Voyage expenses (67) (69)

TC expenses (40) (41)

Operating expenses (49) (46)

General and administrative expenses (24) (23)

Operating result before depr. (EBITDA) 61 69

Depreciation (31) (30)

Impairment (0) (10)

Capital gain (loss) on non-current assets 0 12

Operating result (EBIT) 30 41

Net finance (13) (13)

Taxes (1) (5)

Net result 16 24

1. Proportional consolidation method

Income statement¹ – Second quarter 2016 Odfjell Group

4

Financials

USD millions 1H 2016 1H 2015Gross revenue 490 539







Impairment (10) (10)

Capital gain (loss) on non-current assets 12 -


Net finance (26) (42)

Taxes (6) (0)

Net result 40 (25)


Income statement¹ – First half 2016 Odfjell Group

5

Quarterly figures¹ – Odfjell Group

Financials

Quarterly Gross Revenue and EBITDA, USD millions

2Q16 versus 1Q16• Reduced revenue mainly due to softer markets and fewer operational days• EBITDA remains healthy due to increased competiveness

241249253276279260276292302

Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014Q3 2014Q2 2014 Q2 2016

6169

455753

353431

15

Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014Q3 2014Q2 2014 Q2 2016

Gross Revenue

EBITDA

1. Proportional consolidation method6

Financials

EBITDA variance¹ – Odfjell Group


Quarterly EBITDA, USD millions

2Q 2016

60.6

G&A

0.6

OPEX

2.7

TC exp.

1.1

Voy exp.

2.3

Gross rev.

8.0

1Q 2016

68.6

1H 2016

129.2

G&A

5.7

OPEX

8.6

TC exp.

2.7

Voy exp.

73.3

Gross rev.

49.1

1H 2015

87.9

2Q 2016

versus1Q

2016

1H 2016

versus1H

2015

• Gross revenue down 3%

• Voyage expenses reduced 3%

• EBITDA down 12%

• Gross revenue down 9%

• Voyage expenses reduced 35%

• OPEX reduced 8%

• EBITDA improved 47%

7

Quarterly figures¹ – Odfjell Group

Financials

Operating Result (EBIT)¹, Net Finance² and Net Result, USD millions

• EBIT 1H 2016 USD 71 mill compared to 1H 2015 USD 18 mill• Net interest remain stable• Return on equity first half at 11.1%

3041

0

2612555

-15

16

-17

77

-32-17-9

-26

Q1 2016

24

Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014Q3 2014Q2 2014 Q2 2016

1. Proportional consolidation method2. Equity method

Operating Result (EBIT)¹

Net Finance²

Net Result

-10 -20

-11-11-12-12-10-11-9-9 -79

-7

-21-9-14 -9-10-11-14-3

-30

Net interest Other financial/currency

8

Financials

242191

73 59 61 66

147

74

95

109 110 9627

98 97

40

20162012

93

2011

157

2010

169

2009 2015

191

2014

96

2013

11722

182

2008

286

2007

316

Annualised EBITDA1, USD millions

1. Proportional consolidation method according to actual historical ownership share

Segment details, 2Q 2016

86% 79% 69%

13% 20% 28%

EBITDA

100%

Gross revenue

100%

Assets

100%

Chemical tankersTank terminalsLPG/EthyleneResults per segment¹

9

2Q 2016 1Q 2016

USD millionsChemical tankers

Tank terminals

LPG/Ethylene

Chemical tankers

Tank terminals

LPG/Ethylene

Gross revenue 207 31 3 215 31 4EBITDA 48 12 1 56 12 1EBIT 25 4 0 39 4 (2)

Income statement¹ – 2Q16 chemical tankers

USD millions 2Q 2016 1Q 2016

Gross revenue 207 215




General and administrative expenses 2 (19) (18)



Impairment (0) (7)

Capital gain/loss on fixed assets 0 12


Financials

• EBITDA margin 2Q of 23% compared with 1Q of 26%

1. Proportional consolidation method2. Including corporate functions

10

Financials

Quarterly figures - Chemical tankers EBITDAadjusted for non-recurring items

-20

0

20

40

60

80

Q1 2016Q4 2015Q3 2015Q2 2015Q1 2015Q4 2014Q3 2014Q2 2014 Q2 2016

Quarterly Operational EBITDA (adjusted for provisions and derivatives)USD millions

• Bunker derivatives negative USD 0.5 mill in 2Q16 compared to USD 0.9 mill in 1Q16• In total USD 64.3 mill booked as voyage cost related to bunker derivatives in 2015• Total provisions/one-offs of USD 5.5 mill in 2015

EBITDABunker derivativesProvisions

11

Financials

EBITDA variance – Chemical tankers

2.0

TC exp.

3.4

Bunker der.

11.6

Voy exp.

25.1

2Q 2015

-4.5

-35.7

Bunker cl.

41.9

2Q 2016

47.6

G&A

3.9

OPEXGross rev.

2Q 2016versus

1Q 2016

2Q 2016versus

2Q 2015

• Net gross revenue down 16%

• Net voyage expenses reduced 36%

• EBITDA improved 14%

• Net gross revenue down 4%

• EBITDA down 14%

-1.3

TC exp.

0.2

2Q 2016

Bunker der.

0.4

Voy exp.

1.7

Bunker cl.

4.1 47.6

G&A

-1.1

OPEXGross rev.

-12.1

1Q 2016

55.7

Quarterly EBITDA, USD millions

12

Vessel operating expenses – Chemical tankers

Financials

Vessel operating expenses (OPEX), USD/day

• OPEX remains competitive at stable level

0

2 000

4 000

6 000

8 000

10 000

12 000

2016YTD

201520142013201220112010200920082007

Crew costNon-crew OPEX

0

2 000

4 000

6 000

8 000

10 000

12 000

1Q164Q153Q152Q151Q154Q143Q142Q14 2Q16

Yearly development, 2007 - 2016 YTD Quarterly development, 2Q 2014 - 2Q 2016

Bunker development

Financials

• Net bunker cost in 2Q USD 324 per tonne before hedging vs. USD 369 in 1Q• Bunker clauses in CoAs cover about 60% of the exposure• 8% of remaining 2016 exposure is hedged at average USD 253 per tonne and 7% of 2017

exposure is hedged at USD 224 per tonne

Bunker purchase

Bunker clausesincl. in revenue

Bunker hedging

1Q16

37.8

21.4

15.5

4Q15

59.5

26.4

12.5

20.5

3Q15

63.7

36.8

9.9

17.0

2Q15

57.9

38.9

6.9

12.1

2Q16

32.9

21.0

11.4

Quarterly net bunker costUSD millions 2Q 2015 - 2Q 2016

Platts 3.5% FOB RotterdamJanuary 2012 - July 2016

0

100

200

300

400

500

600

700

800

01.201601.201501.201401.201301.2012

USD per metric tonne

14

USD millions 2Q 2016 1Q 2016

Gross revenue 31 31






Financials

• Slight increase in tank terminal results• Higher OPEX due to large maintenance projects in 2Q• The occupancy rate continued high at 97% in 2Q


Income statement¹ – 1Q16 tank terminals

15

Financials

Tank terminals EBITDA – By geographical segment

• Stable results in all areas• Odfjell Terminals (Rotterdam) continues

positive trend

EBITDA, USD millions YTD

EBITDA Tank Terminals 2Q 2016 1Q 2016

Europe 2 1North America 5 5Asia 3 4Middle East 2 2Total EBITDA 12 12

4

7

10

3

Europe North America Asia Middle East

16

Balance sheet¹ – 30.06.2016

Assets, USD millionsShips and newbuilding contracts 1 221

Other non-current assets/receivables 39

Investment in associates and JV’s 372

Total non-current assets 1 632

Cash and cash equivalent 148

Other current assets 115.

Total current assets 263

Assets held for sale 22

Total assets 1 916

Equity and liabilities, USD millionsTotal equity 663

Non-current liabilities and derivatives 34

Non-current interest bearing debt 903

Total non-current liabilities 937

Current portion of interest bearing debt 221

Other current liabilities and derivatives 95

Total current liabilities 316

Liabilities held for sale -

Total equity and liabilities 1 916

Financials

• Cash balance of USD 148 mill - excluding JV’s cash• Net investment in tank terminals JV’s USD 308 mill• Equity ratio 34.6% (34.0% end 1Q)• Asset held for sale consist of planned vessel sales

1. Equity method17

• In June Bow Harmony was sold and leased back on an 11-year financial lease structure• NOK bond maturing with USD 105 mill in April 2017

Debt Portfolio, USD millions Debt Repayments, USD millions

Financials

0

50

100

150

200

250

300

2019201820172016 2020Secured loansNOK Bond 12/18

NOK bond 12/17LeasingBalloon

Debt development – 30.06.2016

18

0

200

400

600

800

1 000

1 200

20202016 2017 2018 2019Ending balance Repayment

USD millions Remaining 2016 2017 2018 2019 2020

Chemical Tankers

Docking 7 14 14 14 14

Other investments (vessel retrofitting) 4 7

Odfjell Gas, 100%1

Sinopacific, 2 x 17,000 cbm TBD

Sinopacific, 4 x 22,000 cbm 30 139

Tank Terminals, 100%

Planned capex 39 46 40 9 8

Financials

Capital expenditure programme – 30.06.2016

1 Odfjell SE (50% owner) is committed to inject up to USD 45 mill in equity in 2016 - 2017. Due to cancellation and delays at the yard the capital injections will be significantly reduced and/or pushed to later than originally scheduled

19

Terminal projects and expansions

• Our terminal in Tianjin China is still awaiting permits which is expected to be in November• Odfjell Terminals have initiated a full strategic business review of the activities. This initiative is led by the new terminal management headed by the new CEO Odfjell Terminals, Frank Erkelens, and will be completed later this year

Operational review

20

Odfjell Terminals Rotterdam – current status

40

-20

-40

-60

20

0

-80

60

2014 201620152009 20132007 20102008 2011 2012

• The terminal has now delivered positive EBITDA for three consecutive quarters

• The distillation volumes in Rotterdam continued to increase in 2Q

• The commercial available tank capacity in Rotterdam reached 1,011,000 cbm by end of June as planned

• The Rotterdam results are expected to stabilise for the remainder of 2016

Annualised EBITDA for Odfjell Terminals (Rotterdam) (100%)EUR millions

Operational review

21

Due to delayed construction of our LPG/Ethylene vessels on order, we have cancelled the two first 17,000 cbm gas carriers

We will most likely cancel the remaining orders when we are in a cancelling position

All investments paid for the cancelled vessels have been returned by the refund guarantor

The remaining orders are secured by refund guarantees from reputable financing institutions

USD millions 2Q 2016 1Q 2016Gross revenue 3 4

EBITDA 1 1

EBIT 0 (2)

Operational review

Odfjell Gas Carriers

22

Market activity was reasonably stable, but increased competition

The contract coverage for the pool is satisfactory

Fleet additions DWT Built Tanks TransactionJuly 2016 Bristol Trader 35 863 2016 Stainless Long-term TC

June 2016 Bow Harmony 33 619 2008 Stainless Sale/lease back

February 2016 Southern Owl 26 057 2016 Stainless Long-term TC

Short-term TC: Up to one yearMedium-term TC: 1-3 years

Fleet disposals, owned DWT Built Tanks Transaction

2H 2016 Bow Master 6 046 1999 Stainless Bareboat

June 2016 Bow Sailor 6 008 1999 Stainless Sale

June 2016 Bow Harmony 33 619 2008 Stainless Sale/lease back

November 2015 Bow Victor 33 000 1986 Stainless Recycling

August 2015 Bow Bracaria 5 846 1997 Stainless Sale

July 2015 Bow Brasilia 5 800 1997 Stainless Sale

July 2015 Bow Balearia 5 846 1998 Stainless Sale

Operational review

Fleet development – Last 12 months

23

Market update and prospects

• 2Q saw a slight reduction in TCElevels

• The slowdown observed in 1Q in the Far East spot market continued throughout 2Q and gradually spread to other markets

• The volume transported also decreased due to fewer operational days available compared to 1Q.

• In spite of the more challenging market, we delivered acceptable utilization through stable contract nominations for our vessels and agility in the spot market

• Our forecast for 3Q is a limited reduction in TCE results as the markets are generally softer

Market update – Chemical tankers

Source: Clarkson Platou

1. Odfix Index (1Q 1990 = 100) 2. Chemical tanker spot earnings index (midcycle = 100)

24

50

75

100

125

150

175

200

07 08 09 10 11 12 13 14 15 16

Odfix Index

Odfix Quarterly Average 2007-2015

Odfix, Quarterly average Index, 1990=100

Chemical tanker spot earnings index (midcycle = 100)Source: Clarkson Platou


Chemical tanker market

1. Differences between sources due to different fleet definitions. Stricter definition and thus, more limited fleet basis2. IMO 2 tonnage ≥ 13,000 dwt, predominantly trading in chemicals. Assuming current orderbook and outphasing at 30 years (Europe built) or 25 years (Asia built).

25

0

3

6

9

12

15

18

05 06 07 08 09 10 11 12 13 14 15 16 17 18

Odfjell Core FleetInge SteenslandClarksonsSwedbank

Year-on-year growth1 (%)

Forecasts

Annual compound growth rate 2015-18:Odfjell estimate core fleet: 6.8%Average other sources, full fleet: 3.7%

Chemical tanker year-on-year net fleet growth, 2005-2018F

The consensus is that supply and demand is fairly well balanced, which is also our view

26

Chemical tanker supply and demand forecast, 2015-2018E

100

105

110

115

120

125

Growth in supplyIndexed (2015 = 100)

2018E2017E2016E100

105

110

115

120

125

2018E2017E2016E

Growth in demandIndexed (2015 = 100)

Inge SteenslandOdfjell core fleet

AverageSwedbank

Clarksons

ClarksonsInge SteenslandAverage

World GDP (x1.5)

Average compound annual growth rate (2015-2018): 4.9%

Average compound annual growth rate (2015-2018): 4.5%

Source: Odfjell FleetBase, IMF, various external sources


Prospects

• Our forecast for 3Q is a slightly weaker timecharter results as the markets are generally

softer

• The long term balance between supply/demand in the chemical tanker market remains

favourable, but the supply of ships is increasing mainly due to swing tonnage. The markets

are therefore under pressure, but our high COA coverage is reducing the impact of the

softer spot market

• The result at Odfjell Terminals is expected to be stable for the remainder of 2016

27


Executive Management - Priorities during 2016

2016 “Building strength”• Key focus continues to be on:−Operational improvements and quality of service− Initiatives that improve cash and balance sheet −A balance sheet that gives room for growth within our core business

• Top line improvement initiatives ongoing• Fleet renewal programme for the advanced chemical tankers• Strategic review of our terminal business• Reduce our commitments in Odfjell Gas

2017 “Build for the future”• Focus on building competitive strength in our markets• Group strategy review• Focus on growth

28

IR – contactTom A. Haugen │ VP Finance, Odfjell SEEmail: [email protected]: +47 905 96 944

Kristian V. Mørch │ CEO, Odfjell SEEmail: [email protected]: +47 55 27 00 00

Terje Iversen │ CFO, Odfjell SEEmail: [email protected]: +47 932 40 359

Company representatives

29

ODFJELL SE

Conrad Mohrs veg 29,P.O. Box 6101 Postterminalen5892 Bergen, NorwayTel: +47 5527 0000Fax: +47 55284741E-mail: [email protected]. no: 930 192 503

www.odfjell.com

Investor Relation and Media contact Tom A. HaugenPhone: + 47 55 2746 69Mobile: + 47 90 59 69 [email protected]

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SECOND QUARTER/ FIRST HALF 2016 PRESENTATION 25 August 2016 · PRESENTATION 25 August 2016 1 ......

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